More RRSP Help.
What's an RRSP?
A Registered Retirement Savings Plan (RRSP) is a government approved plan through which you save money for your retirement years and any income or growth you earn is tax deferred until you withdraw money.
- Up to a maximum contribution limit allowed for the year
- The amount you can contribute is 18% of your previous year's earned income less any pension adjustments, up to the maximum contribution limit allowed for the year
- Contribution deadline – You must make your contribution within the first 60 days of the new year
- The next deadline is March 1, 2022
Withdrawing money from an RRSP account.
When you withdraw funds from an RRSP, your financial institution withholds a portion of the taxes owed and forwards to CRA on your behalf. The rates depend on your residency and the amount you withdraw. For residents of Canada, the rates are:
- 10% (5% in Quebec) on amounts up to $5,000;
- 20% (10% in Quebec) on amounts over $5,000 up to including $15,000
- 30% (15% in Quebec) on amounts over $15,000
The tax that was withheld may not always be enough to account for the tax you owe at your tax bracket. You may have to pay more tax on the withdrawal when you include the withdrawal on your income tax and benefit return for that year.
Additional information is available on the Canada Revenue Agency's website.
Important points to remember:
- The money you put in is tax deductible, within limits, and
- You don't pay taxes on the money you earn in an RRSP until you withdraw it
There are two main reasons:
- You are eligible for a tax refund based on your contribution and the tax rate you pay. Getting your own money back might help you start on other goals like paying off debt or investing in a child's education.
- Age is on your side, so the sooner you start, the better. You have many years to accumulate compound interest, and your earnings are tax sheltered so they will grow even faster than a non-RRSP investment.
Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products. Coast Capital Wealth Management Ltd. provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds. Mutual fund values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses may all be related with mutual fund investments. Important information about mutual funds is contained in the relevant fund facts and simplified prospectus. Please read the fund facts carefully before investing. Only deposits payable in Canada are eligible to be insured under the Canada Deposit Insurance Corporation Act.